Macy's v. J.C. Penney to go to Trial over Martha Stewart Deal

Photo: Eric Thayer/Reuters

Macy's, Inc.'s lawsuit against J.C. Penney is set to go to trial in New York State Supreme Court on February 19th over J.C. Penney's deal with Martha Stewart Living Omnimedia, Inc ("MSLO").  Back in December 2011, JCP announced that is was buying a 16.6 percent stake in MSLO and that the companies entered into a partnership featuring Martha Stewart products and know-how.  Sounds familiar? That's because Macy's also has a deal with MSLO since 2006 until 2018 if renewal options are exercised.  

As expected, Macy's quickly sought to enjoin MSLO from going forward with the partnership.  In July 2012, the court granted Macy's preliminary injunction against MSLO with respect to certain product lines such as soft furnishings, dinnerware and cookware that it has an exclusive right to sell.  MSLO appealed and that decision is still pending.


In August 2012, Macy's sued JCP claiming that  JCP "tortiously interfered, and continues to tortiously interfere, with a contract that Macy’s validly entered into with Martha Stewart Living Omnimedia Inc. [and] J.C. Penney knew that such a contract existed, and nonetheless induced MSLO to materially breach that contract."  The complaint asks for a preliminary injunction and a permanent injunction enjoining JCP from using Martha Stewart’s name or likeness in connection with the “manufacture, marketing, sale or distribution” of products in certain categories and unspecified damages.

Fast forward to today, Macy's v. JCP is set for a bench trial and the question of damages won't be decided.  The judge presiding over the case, Judge Jeffrey Oing, stated, "[any potential damages in the dispute] are going to pale in comparison to the injunction.  That’s the real big bucks there, if I stop this deal.”

Judge Oing will also have to decide MSLO's counterclaims that Macy's breach its agreement by only using the Martha Stewart name to entice customers into the department store but failing to maximize sales of  Martha Stewart products. 

MSLO will comply with the injunction in the meantime but plans to go ahead with JCP in launching other products in-stores and online by spring of this year.

Read More:
Bloomberg: Macy’s Trial Over Martha Stewart Rights Set for February
WWD: Macy's Inc. Prepping for Trial